Performance, Commentary & Portfolio
ISIN GB00BNG2M159 | SEDOL BNG2M15
Fund Manager’s Review
Portfolio Overview
Allianz Technology Trust’s Net Asset Value (NAV) total return was 2.81% in December, compared to the Dow Jones World Technology Index return of 3.48%.
Technology shares were higher as artificial intelligence (AI)-related stocks continued to hold up well, outpacing broader global equities which slid as the euphoria of Trump’s decisive election victory faded and the U.S. Federal Reserve issued a more hawkish outlook for interest rates in 2025.
Monthly performance results modestly trailed the benchmark, due primarily to short-term industry allocation impacts, which counterbalanced bottom-up stock selection. Our positioning within semiconductors aided relative performance for the month, followed by gains in communications equipment, which was offset by more conservative stock selection in interactive media and services, as well as an above-benchmark exposure to financial services, entertainment and software industries.
Contributors
Our active overweight allocation in digital semiconductors and security solutions provider Broadcom Inc., contributed to results as shares rallied following a strong earnings result which showed the company continued to execute at a high level, leading to gross margin improvement and new customer wins, particularly given the strong growth in AI-related exposure.
Our structural below-benchmark allocation, given our maximum position size limitations, to graphics processing and related networking leader NVIDIA Corp. aided results for the month as the stock price moderated following outsized gains in prior months.
Our active overweight allocation to Palantir Technologies Inc., a global trailblazer in the field of data analytics, with a range of products and services, contributed to performance as investors continued to bid shares higher given the company’s long-term growth potential and strong leadership position.
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The advancements in AI have catapulted us into an exciting time in history, particularly given the expectations of AI’s vast potential to reshape the global economy |
The avoidance of digital marketing and creative software developer Adobe Inc. and a below-benchmark allocation to enterprise software, cloud storage and cyber security leader Microsoft Corp. also contributed to relative performance for the month.
Detractors
Our active underweight in search engine, infrastructure and data analytics application leader Alphabet Inc. detracted from relative performance for the month as shares advanced due in part to a more favourable regulatory outlook with the incoming U.S. Presidential administration. We added to our position during the month given a more attractive risk versus reward.
A below-benchmark position in iPhone and personal computer maker Apple Inc. offset the results, as the stock was higher due in part to the company’s improving outlook for the coming year combined with new Apple Intelligence AI features across its devices and services ecosystem, which were seen as an incremental growth driver.
Shares of cloud-based security-as-a-service platform Zscaler, Inc. were lower despite upside earnings results as the retirement of the company’s CFO could create uncertainty around expectations and new customer gains grew at a slower pace than the prior quarter, due in part to sales force attrition.
Our exposure to Toast, Inc. a provider of restaurant management hardware and software and our above-benchmark allocation to Snowflake Inc. a cloud-based data storage platform for data storage, processing and analytics, also offset relative performance in December.
New buys and sells
Turnover in the month was at a lower-than-typical level as the majority of companies in the portfolio had reported prior to December, and we entered a period of seasonally decreased trading volume due to the end of year holidays. We newly purchased shares of Marvell Technology Inc. (a developer and producer of semiconductor and related technology across security and networking platforms, secure data processing and storage solutions) amid expectations of strong earnings visibility related to recent design wins and exposure to hyperscalers (large-scale data centers). There were no other new buys in the portfolio. We sold Advanced Micro Devices Inc. due in part to a lackluster PC outlook and higher risk related to AI chip competition, given our expectations that there were other companies in the industry with a better growth versus valuation profile. We also made the decision to fully exit our position in MercadoLibre, Inc. the largest online commerce platform in Latin American, due to potential impacts for tariffs, currency headwinds and overall macro demand.
Outlook
As we step into 2025, the technology world is buzzing with excitement. The advancements in AI have catapulted us into an exciting time in history, particularly given the expectations of AI’s vast potential to reshape the global economy. This year promises even more groundbreaking AI capabilities, plus favourable regulatory changes and rapid digitalisation. However, there is also some risk in areas like the semiconductor sector which faces some turbulence due to geopolitical and policy uncertainties. Our expectation is that AI spending will expand beyond infrastructure, mergers and acquisitions activity is likely to increase, and areas like Internet of Things (IoT), digitisation and cryptocurrency may further garner attention from the investment community.
Our focus remains on building the portfolio from a bottom-up perspective with a macro-overview. Technology remains a key enabler across almost every vertical industry, and we will continue to seek stocks which solve difficult problems and can be long-term outperformers. Despite shortterm periods of higher volatility, earnings growth ultimately drives stock prices over the long term, and in our view, we are still early in the spending trend supporting this dynamic segment.
Mike Seidenberg
10 January 2025
This is no recommendation or solicitation to buy or sell any particular security. Any security mentioned above will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date.
1.Calculated as 10% of outperformance against the benchmark, after adjusting for changes in share capital and will be capped at 1.75% of the Company’s average daily NAV over the relevant year.
2. As at the Trust’s Financial Year End (31.12.2022). Ongoing Charges (previously Total Expense Ratios) are published annually to show operational expenses, which include the annual management fee, incurred in the running of the company but excluding financing costs.
Registrations |
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Company No. |
03117355 |
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FATCA GIIN No. |
YSYR74.99999.SL.826 |
Codes |
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RIC |
ATT.L |
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SEDOL |
BNG2M15 |
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ISIN |
GB00BNG2M159 |
Awards & Ratings
Investment Week Investment Company of the Year Award 2021 – Specialist category
Allianz Technology Trust won this coveted award in November 2021, having also been a winner in similar categories in 2020, 2019, 2018, 2017 and 2015. This award recognises excellence in closed-ended fund management and highlights ATT’s consistent performance over time. The judging panel was made up of some of the UK’s leading researchers and investors in investment trusts and closed-ended companies, as well as several senior board members with many years’ experience in the industry.
Association of Investment Companies Shareholder Communication Awards 2021
Allianz Technology Trust won the Best Large Trust category, in recognition of its consistent, high achievement. The publication noted that ATT achieved the highest returns among this year’s award-winners (performance measured over three years to 31 January 2020), calling it “a worthy winner of our most prestigious sector award”. This accolade is an independent, statistical and qualitative assessment of ATT’s performance and highlights the Trust’s outperformance both in its class and against its peers.
Shares Awards 2020 – Best Investment Trust
Allianz Technology Trust was pleased to win ‘Best Investment Trust’ in The Shares Awards 2020. The awards were voted by readers of Shares and by the general public, making the award truly representative of the people who invest in the Trust and its peers. In presenting the award, Shares Magazine noted: “The technology sector had been in the ascendancy even before the events of 2020 but the global pandemic has super-charged this trend. We have been even more reliant on tech to tackle the day-to basics of work and home life. Staying in touch through video conferencing, ordering goods and food online and streaming entertainment to keep us entertained at home. Allianz Technology Trust is plugged into these themes and was voted Best Investment Trust in this year’s Shares Awards.”.
Kepler Growth Rating
Kepler Ratings are designed with investment trusts specifically in mind and aim to highlight those which they consider to be ‘best in class’ based on a clear, easy to understand set of quantitative tests. The selection system is entirely quantitative, setting aside all personal biases and views, looking at the universe in a purely objective way.
Morningstar Rating Allianz Technology Trust has a 5 star rating with Morningstar. This is a risk-adjusted, cost-adjusted comparison of fund performance within fund categories. The underlying methodology is robust and accounts for periods of volatility-downward volatility in particular-and also adjusts for fund expenses, including sales charges. That means the more expensive the fund is, the harder it will be for the fund to earn a high star rating.
A ranking, a rating or an award provides no indicator of future performance and is not constant over time.
Morningstar star rating © 2021 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.